NEW YORK--(BUSINESS WIRE)--Wall Street Webcasting has prepared and provided for you an exclusive broadcast of Wells Fargo Securities own Rich Gordon. Gordon is highly recognized for his weekly narrates regarding the fixed income strategy at Wells Fargo Securities (NYSE:WFC). This week, Gordon concentrates on the bounce back of the stock market.
The catalyst for the risk re-balancing was a strong payroll report on Friday and an even stronger upward revision to the previous 2 reports. The U.S. economy added 257,000 jobs to the economy in January, bringing a total of 1 ½ million jobs to the work force since September. This marks the best 5 month stretch of hiring in the last 17 years. The strength of the report came as a surprise. There’s a 24% chance of a rate hike at the June meeting, up from 14% last week. Despite the strength of the reports, most traders still don’t believe that the fed will raise rates this month and most still don’t think that they will raise rates even this year.
Investors who have been sitting on cash, waiting for a better entry point to buy bonds, now have it. The 10-Year Treasury Yield has risen by more than 30 basis points throughout the last 6 trading days. The slope between the short and intermediate parts of the curve has steepened, especially between fed funds in 3 years. The chart shows a sharp 25 point steepening between those 2 curve points during February. CPE Investors and banks should capitalize on this steepening by adding securities in the 2-5 year part of the curve, taking on duration to capture the extra yield.
To hear a more in depth explanation of the recent booming economic data, please tune into The Wells Fargo Securities latest video.
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